Bank Sarasin sees PV consolidation

Switzerland's Bank Sarasin says few PV firms will survive current market shakedown. In the US, First Solar is expected to continue to do well, whereas SolarWorld may be the only German firm to survive.

First Solar will be one of the survivors of the current shake-down according to Bank Sarasin: Photo: First Solar

For years now, Bank Sarasin has been reporting on the solar sector, mainly in German under the leadership of Matthias Fawer (see this Renewables International article). The bank is therefore better known in the German-speaking world, and a number of German firms look to it for expertise. For instance, Freiburg's Solar-Fabrik also mentions the bank's reports in its financial statements.

The German industry will not, however, be happy about the bank's latest findings, which it published last week in English. In a report entitled "Solar industry: Survival of the fittest in a fiercely competitive marketplace," (available under the link above for €120) the bank says that the current consolidation phase on the photovoltaics market could spell doom for a number of firms that have been around for many years but nonetheless failed to become giants. The bank specifically mentions "Germany's Conergy, Q-Cells, Solar-Fabrik and Sunways" as firms that might not be around a few years from now. Only a few years ago, Q-Cells was the largest solar firm in the world.

The bank believes that the global market will stagnate over the next four years with growth rates around a few percentage points. But individual markets will perform differently. Europe is expected to see growth slow down altogether, whereas the Indian PV market could grow annually by 100%. Otherwise, the growth drivers will be China, the US, and Japan.

Unfortunately, the bank reiterates the unfounded claim that grid parity will mean that feed-in tariffs can be done away with: "In the next few years, solar power will achieve price parity with the end-user tariff in more and more regions. As a result, solar energy will no longer be dependent on national subsidy programmes." In fact, a switch to net-metering will merely ensure that homeowners install much smaller arrays so that their solar power production does exceed their power consumption, as many years of practice in the US with net-metering have demonstrated. And for utilities, the retail rate – which the bank calls the "end-user tariff" – is irrelevant anyway; for utilities, the merit-order rate during times of peak solar power production applies.

Finally, the bank finds that concentrated solar power (CSP) faces an unclear future now that photovoltaics has become cheaper. Nonetheless, growth rates could be around 17% annually within the next 10 years. (Craig Morris)

1 Comment on "Bank Sarasin sees PV consolidation
"

Starting in 2012 the FiT will be below the retail rate and over the coming years the spread between the FiT and retail is expected to increase by about 2 cents/kWh per year. The growing spread will increasingly incent homeowners and businesses to install PV systems that are sized more modestly - sized to serve onsite load vs. selling to the grid. There is nothing wrong with this at all - it's actually a positive development because it will lead to a sustainable market that isn't dependent on the FiT.
Small/medium sized systems are currently going in for 2200 Euro/KW. If installed costs can be driven down far enough you can replace the FiT with a market driven price. This is what I want to see. I look at a rancher house with 3 occupants and think - installed a 5 KW system, use 50% of the electricity to displace half your retail purchases and sell the other half to the grid. You don't necessarily need to sell your excess at a profit. If you save enough money displacing retail usage you can sell your excess at a loss and still make money on the system.
I like FiTs but you can realize the transition described above with a FiT or with net-metering.